March 15, 2012 / 7:15 AM / 7 years ago

UPDATE 3-JPMorgan staff told go easy on Goldman's Muppetgate

* Rival tells staff not to seek advantage from rivals'
'issues'
    * Dimon tells staff to focus on JPMorgan's own standards


    By Victoria Howley and Nishant Kumar	
    LONDON/HONG KONG, March 15 (Reuters) - Investment bank
JPMorgan tried to contain damage to Wall Street's reputation on
Thursday by telling staff not to try to profit from rival
Goldman Sachs' embarrassment over a vitriolic resignation letter
published in the New York Times.	
    Equity derivatives salesman Greg Smith caused a firestorm
across the banking industry on Wednesday with the letter,
published as an opinion column and calling Goldman a
"toxic" place to work where senior staff saw clients as
"muppets".	
    JPMorgan Chase & Co Chief Executive Jamie Dimon
warned employees in an internal memo not to seek advantage from
Goldman's "alleged issues", imploring them focus on standards,
not on the furore stirred by Smith in what media and bloggers
have called "Muppetgate".	
    "I want to be clear that I don't want anyone here to seek
advantage from a competitor's alleged issues or hearsay -- ever.
It's not the way we do business," Dimon said in the memo, a copy
of which was seen by Reuters.	
    Dimon's memo, awaiting Asia employees in their e-mail
inboxes on Thursday morning, was sent to the bank's global
operating committee and later forwarded to wider parts of
JPMorgan, said sources who have seen the memo.	
    JPMorgan declined to comment.	
    London-based Smith, who had worked for Goldman for almost 12
years, called the bank a "toxic and destructive" place.	
    "It makes me ill how callously people talk about ripping
their clients off," he said in the letter. "Over the last 12
months I have seen five different managing directors refer to
their own clients as 'muppets'."	
    The storm goes to the heart of the reputational crisis in
investment banking since public opinion started blaming the
industry for its role in the 2008 banking crisis which brought
the global financial system close to collapse.	
    "This could be just a disgruntled employee, but it comes at
a time when the industry is not having a great time," said a
senior mergers and acquisitions adviser. "Franchises can be
affected by things like this," this person said.	
    Goldman said in its official response on Wednesday that the
bank disagreed with the views expressed by Smith, "which we
don't think reflect the way we run our business."	
    With the whole industry in a brighter spotlight since 2008,
Goldman has faced a series of incidents that threaten to tarnish
its image in particular.	
    Earlier this month accused of a conflict of interest for
advising El Paso Corp on its sale to Kinder Morgan, in which the
bank was a significant shareholder. 	
    Sources at banks including Citi, Credit Suisse
 and Nomura said they were not aware of any
memo similar to Dimon's at their respective firms.	
	
       	
    	
    MALCONTENTS	
    While Goldman Sachs is attempting to play down the Smith
letter, the firm's shares fell 3.4 percent in trading in New
York on Wednesday, and its impact has become a topic of
discussion among its employees.	
    "It's definitely got people talking in the office," said an
Asia-based Goldman Sachs trader who did not want to be named.	
    "It's amusing honestly because perceptions depend on the
individual. For every one person who has something malicious to
say about the company, you'll find 10 others who have a 180
(degrees different) view," the trader said.	
    Several former Goldman Sachs employees who worked at the
company before its initial public offering said the firm's
culture did change after it got listed, as Smith alleges, with
bankers increasingly under the gun to boost profit.	
    "The culture definitely has changed since I was there," said
property developer SOHO China CEO Zhang Xin, who worked at
Goldman Sachs some 20 years ago and now is a client of the firm.	
    "Since the company went public there's this pressure on
earnings," Xin said.	
    But two Goldman Sachs clients who work at different hedge
funds both said that the criticisms that Smith levels at
Goldman's corporate culture could equally apply to its rivals.	
    "If clients want to start awarding business to nicer,
friendlier banks that would be great. But I don't think that is
going to happen," said one industry insider.
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